Score contribution per author:
α: calibrated so average coauthorship-adjusted count equals average raw count
This paper analyses the consequences of a switch to a more funded pension scheme for economic growth in an economy that consists of a capital‐intensive commodity sector with endogenous growth and a labour‐intensive services sector. The increased savings cause long‐run growth to be higher in a closed economy, provided capital and labour are not strong substitutes. The reverse holds for a small open economy. More funding can therefore turn out to be a curse instead of a blessing for future generations, unless countries implement their reforms simultaneously or impose a tax on labour‐intensive services.